As technology becomes ever more powerful, convenient and complex, a broader knowledge base is required of all employees. Increasingly, the skills of the labor force and their ability to imagine new futures provide companies with their most valuable competitive weapon. Smart companies develop smart, satisfied employees with broad-bandwith capabilities by expanding their skills across traditional functional boundaries (by blending, for example, expertise in technical design, quality engineering and manufacturing operations). The prized employee is one who learns quickly and continuously, works collaboratively with others, and is comfortable in an environment of innovation, experimentation and risk.
This places a premium on a company’s ability to recruit, retain and develop the best people available. It also requires a corporate culture that encourages people with diverse ideas and capabilities to learn from each other and create new opportunities together. Leading companies combine talent and technology in ways that generate much higher profits per employee than was possible in the past. They start by asking, “How do I hire talent that I can profit from? How do I create an organization where innovation is truly everyone’s responsibility?”
To see how easy it is for employees to drive innovation in your company, talk with some first-level employees and ask them the following questions:
• The first question to ask is, “How have you been trained as a business innovator? What investment has the company made in teaching you how to innovate?”
• The second question is, “If you have a new idea, how much bureaucracy do you have to go through to get a small amount of experimental capital? How long is it going to take you to get 20 percent of your time and $5,000 to test your idea? Is that a matter of months or can it happen very easily?”
• The third question is, “Are you actually being measured on your innovative performance or your team’s innovation? How does this influence how you’re paid?"
• And finally ask, “Does the way management works in this company tend to help you work as an innovator or get in the way?”
Whenever I’ve asked these questions to first-line employees, I’ve usually found that in most companies there’s still a big gap between the rhetoric of innovation and its reality.
Tuesday, February 10, 2009
Monday, February 9, 2009
Some criteria for new models.
There are three reasons why the practice of management will change as radically over the first decades of this century as it did during the beginning of the last one.
- First, the impact of new technology, which is providing powerful new tools for coordinating people’s efforts.
- Second, there’s the increasing demand for companies to be adaptable, innovative, and exciting places to work.
- The third force for change is the revolution in expectations. People entering the workforce today are the first generation that’s grown up on the Web. Their basic assumption is that their contribution should be judged simply on the merits of what they do rather than on the basis of their title or credentials or anything else. This is a lesson they’ve learned from their experience in cyberspace (remember the famous cartoon, "on the internet, no one knows you're a dog").
Lowell Bryan, a director at McKinsey & Company, believes that new models for thinking about organizing are needed in all industries because today every company is engaged in thinking-intensive work. The traditional, hierarchically-based 20th-century model isn’t effective at organizing the work of self-directed employees who need to make subjective judgments based on their own special knowledge. And in the digital age, they’re the ones who create the most wealth.
Bryan says we should use hierarchical decision-making only for activities such as allocating resources, appointing people to jobs, and holding people accountable. At the same time, a new model should help self-directed employees collaborate with their peers on a continuous basis, using new mechanisms that enable horizontal transactions to be as efficient as vertical ones. Every large company has significant numbers of thinking-intensive employees who need to collaborate with one another. The winners will be those firms that enable these employees to create more profits by putting their collective mind-power to better use.
We’re in the early stages of a long process of innovation in how we design organizations that will eventually go to places we can’t see yet. But I believe we can already see enough to identify huge opportunities for companies who take advantage of what’s currently known. Innovation is taking place all over the place, but organizational barriers prevent successful innovations from being adopted throughout the rest of the company or the industry. I'll illustrate this with case studies in the weeks to come.
Today, too many executives believe that while a few people in the company may be really clever and creative, most are not. If you study companies like Toyota, you'll see how they’ve benefited by mobilizing the intelligence of so-called ordinary workers. Going forward, no company will be able to afford to waste a single iota of human imagination and intellectual power.
- First, the impact of new technology, which is providing powerful new tools for coordinating people’s efforts.
- Second, there’s the increasing demand for companies to be adaptable, innovative, and exciting places to work.
- The third force for change is the revolution in expectations. People entering the workforce today are the first generation that’s grown up on the Web. Their basic assumption is that their contribution should be judged simply on the merits of what they do rather than on the basis of their title or credentials or anything else. This is a lesson they’ve learned from their experience in cyberspace (remember the famous cartoon, "on the internet, no one knows you're a dog").
Lowell Bryan, a director at McKinsey & Company, believes that new models for thinking about organizing are needed in all industries because today every company is engaged in thinking-intensive work. The traditional, hierarchically-based 20th-century model isn’t effective at organizing the work of self-directed employees who need to make subjective judgments based on their own special knowledge. And in the digital age, they’re the ones who create the most wealth.
Bryan says we should use hierarchical decision-making only for activities such as allocating resources, appointing people to jobs, and holding people accountable. At the same time, a new model should help self-directed employees collaborate with their peers on a continuous basis, using new mechanisms that enable horizontal transactions to be as efficient as vertical ones. Every large company has significant numbers of thinking-intensive employees who need to collaborate with one another. The winners will be those firms that enable these employees to create more profits by putting their collective mind-power to better use.
We’re in the early stages of a long process of innovation in how we design organizations that will eventually go to places we can’t see yet. But I believe we can already see enough to identify huge opportunities for companies who take advantage of what’s currently known. Innovation is taking place all over the place, but organizational barriers prevent successful innovations from being adopted throughout the rest of the company or the industry. I'll illustrate this with case studies in the weeks to come.
Today, too many executives believe that while a few people in the company may be really clever and creative, most are not. If you study companies like Toyota, you'll see how they’ve benefited by mobilizing the intelligence of so-called ordinary workers. Going forward, no company will be able to afford to waste a single iota of human imagination and intellectual power.
Friday, February 6, 2009
Leisure, a poem by W. H. Davies.
My daughter recently sent me a 2007 article from The Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2007/04/04/AR2007040401721.html) describing how Joshua Bell, a virtuoso concert violinist, played unannounced for three-quarters-of-an-hour in a Washington DC subway station during rush hour on a workday morning. Over a thousand people passed by in that time but hardly anyone appears to have noticed, let alone stopped to listen. The article asks the question - in our busy lives, do we have time for beauty?
This reminded me of the following poem by W. H. Davies. William Henry Davies (1871-1940) was born in Newport, Monmouthshire, in Wales, the son of a publican. After an apprenticeship as a picture-frame maker and a series of laboring jobs, he traveled to America, first to New York and then to the Klondike.
He returned to England after having lost a foot jumping a train in Canada, where he led a penurious life in London lodging houses and as a pedlar in the country. He was married in 1923, to Emma, who was much younger than he. His first poems were published when he was 34.
Most of his poetry is about nature or life on the road and has a natural simple, earthy style. He also wrote two novels and autobiographical works, his best known being Autobiography of a Super-Tramp.
Leisure by W. H. Davies.
What is this life if, full of care,
We have no time to stand and stare?
No time to stand beneath the boughs,
And stare as long as sheep and cows:
No time to see, when woods we pass,
Where squirrels hide their nuts in grass:
No time to see, in broad daylight,
Streams full of stars, like skies at night:
No time to turn at Beauty's glance,
And watch her feet, how they can dance:
No time to wait till her mouth can
Enrich that smile her eyes began?
A poor life this if, full of care,
We have no time to stand and stare.
This reminded me of the following poem by W. H. Davies. William Henry Davies (1871-1940) was born in Newport, Monmouthshire, in Wales, the son of a publican. After an apprenticeship as a picture-frame maker and a series of laboring jobs, he traveled to America, first to New York and then to the Klondike.
He returned to England after having lost a foot jumping a train in Canada, where he led a penurious life in London lodging houses and as a pedlar in the country. He was married in 1923, to Emma, who was much younger than he. His first poems were published when he was 34.
Most of his poetry is about nature or life on the road and has a natural simple, earthy style. He also wrote two novels and autobiographical works, his best known being Autobiography of a Super-Tramp.
Leisure by W. H. Davies.
What is this life if, full of care,
We have no time to stand and stare?
No time to stand beneath the boughs,
And stare as long as sheep and cows:
No time to see, when woods we pass,
Where squirrels hide their nuts in grass:
No time to see, in broad daylight,
Streams full of stars, like skies at night:
No time to turn at Beauty's glance,
And watch her feet, how they can dance:
No time to wait till her mouth can
Enrich that smile her eyes began?
A poor life this if, full of care,
We have no time to stand and stare.
Thursday, February 5, 2009
Reinventing a 100-year-old management model.
“Sometime over the next decade,” warns renowned business guru Gary Hamel in his book, The Future of Management, “your company will be challenged to change in a way for which it has no precedent.” What’s even more worrisome, he argues, is that decades of orthodox management decision-making practices, organization designs, and approaches to employee relations provide no real hope that companies will be able to avoid faltering and/or suffering through painful restructurings.
Lowell Bryan and Claudia Joyce, in their book, Mobilizing Minds, arrive at a similar conclusion from a slightly different perspective. They show that the 20th-century model of designing and managing companies by emphasizing hierarchy and centralized control, not only gets in the way of collaboration and wealth creation by talented employees but also generates unnecessary complexity that works at cross-purposes to those critical goals. Forward-looking executives will respond to these challenges, these authors conclude, by bringing the same energy to developing innovative management that they now bring to creating innovative products and services.
The opportunity is huge - and urgent. Against the backdrop of dramatic technological change, ongoing globalization, and the declining predictability of strategic-planning models, only new approaches to managing and organizing talent will provide companies with a sustainable competitive advantage. The challenge: as companies discard decades of management orthodoxy, they'll have to balance revolutionary thinking with practical experimentation to "feel their way" to new, innovative management models.
For over 30 years I’ve helped primarily large companies innovate. And despite a lot of successes along the way, I’ve often felt as though I was trying to teach a dog to walk on his hind legs. Certainly, if you get the right people together, create the right incentives, and eliminate erroneous past practices, you can spur a lot of innovation. But the moment you turn your back, the dog is on all fours again because it has four-legged DNA, not two-legged DNA.
So over the years, it’s become increasingly clear to me that most organizations don't have innovation DNA and they don’t have adaptability DNA. This realization led me to ask: what problem was management initially invented to solve? Reading the early pioneers like Frederick W. Taylor, I realized that management was designed to solve a very specific problem — how to do things that could be perfectly replicated, on an ever-increasing scale and at steadily increasing efficiency.
However, perfect replication isn't particularly desirable or useful in a constantly changing, fast-moving world. Instead, management now faces a new set of challenges:
- How to build organizations that are as nimble as change itself.
- How to mobilize and monetize the imagination of every employee, every day.
- How to create organizations that are highly engaging places to work in.
I believe these challenges simply can’t be met without reinventing our traditional management model. And that's why I want to share some experiences and ideas about innovative management, starting next week.
But first, we'll have a poem tomorrow.
Lowell Bryan and Claudia Joyce, in their book, Mobilizing Minds, arrive at a similar conclusion from a slightly different perspective. They show that the 20th-century model of designing and managing companies by emphasizing hierarchy and centralized control, not only gets in the way of collaboration and wealth creation by talented employees but also generates unnecessary complexity that works at cross-purposes to those critical goals. Forward-looking executives will respond to these challenges, these authors conclude, by bringing the same energy to developing innovative management that they now bring to creating innovative products and services.
The opportunity is huge - and urgent. Against the backdrop of dramatic technological change, ongoing globalization, and the declining predictability of strategic-planning models, only new approaches to managing and organizing talent will provide companies with a sustainable competitive advantage. The challenge: as companies discard decades of management orthodoxy, they'll have to balance revolutionary thinking with practical experimentation to "feel their way" to new, innovative management models.
For over 30 years I’ve helped primarily large companies innovate. And despite a lot of successes along the way, I’ve often felt as though I was trying to teach a dog to walk on his hind legs. Certainly, if you get the right people together, create the right incentives, and eliminate erroneous past practices, you can spur a lot of innovation. But the moment you turn your back, the dog is on all fours again because it has four-legged DNA, not two-legged DNA.
So over the years, it’s become increasingly clear to me that most organizations don't have innovation DNA and they don’t have adaptability DNA. This realization led me to ask: what problem was management initially invented to solve? Reading the early pioneers like Frederick W. Taylor, I realized that management was designed to solve a very specific problem — how to do things that could be perfectly replicated, on an ever-increasing scale and at steadily increasing efficiency.
However, perfect replication isn't particularly desirable or useful in a constantly changing, fast-moving world. Instead, management now faces a new set of challenges:
- How to build organizations that are as nimble as change itself.
- How to mobilize and monetize the imagination of every employee, every day.
- How to create organizations that are highly engaging places to work in.
I believe these challenges simply can’t be met without reinventing our traditional management model. And that's why I want to share some experiences and ideas about innovative management, starting next week.
But first, we'll have a poem tomorrow.
Wednesday, February 4, 2009
How to encourage "intrepreneurship."
What is entrepreneurship?
Richard Cantillon, a French economist, originally defined entrepreneurship in 1755 as “self employment with an uncertain return.” Entrepreneurs work independently or as part of a corporation, to develop a product, process, market, or technology into a usable form that’s commercially viable in the marketplace. Entrepreneurs, by definition, chafe at confinement and regimentation.
What is intrapreneurship?
This refers to entrepreneurial efforts inside existing companies ("intrepreneurship") aimed at exploiting new markets or new products, or both, that are eventually treated as new businesses by existing organizations. These venturing efforts may or may not lead to the formation of new units that are distinct from the existing business (e.g., a new company or a new division).
What happens to defeat entrepreneurship in larger companies?
- Success leads to stagnation.
Of the ten leaders in vacuum tubes in 1955, only two were left in 1975. Some failed because of a decision not to invest in the new technology. Others invested, but picked the wrong technology. Still other companies failed because of their inability to play two games at once: to be both effective defenders of what quickly became old technologies and effective attackers with new technologies. Firms like Intel and Motorola were not saddled with internal conflict and inertia, and as they grew, they were able to re-create themselves. Firms like RCA were unable to manage these multiple technological approaches; they were trapped by their successful pasts.
- Large organizations find it difficult to successfully make small investments.
At one firm, it was impossible to invest $20K to automate a simple routine process although the manager could sign off on $20K in overtime for a single weekend. Investments had to be of the order of a million dollars or more just to be considered.
- The company’s culture has a predominantly inward focus.
There are extensive procedures for resolving issues through consensus. There’s an arrogance bred by previous success. There’s a sense of entitlement on the part of some employees to guaranteed jobs without a quid pro quo. There’s a preoccupation with internal procedures rather than an understanding of the changing external marketplace.
The typical intrepreneurial process has four phases:
The Solo Phase, where the intrepreneur works alone to develop an entrepreneurial idea.
The Network Phase, where the intrepreneur shares the idea with close friends and trusted customers.
The Bootleg Phase, where an informal team develops and provides support to the new venture while the intrepreneur takes on the responsibilities of leadership.
The Formal Product Phase, where the new venture becomes a formal, official organizational entity and must deal with the parent organization’s regular policies and practices.
You design organizations that encourage this kind of innovation by creating a culture where employees have a sense of security and a sense of possibility. To get innovation, you must allow freedom to experiment. However, to get good financial results, you must have a high degree of control. This culture is fostered by having internally inconsistent competencies, structures and cultures that can coexist, yet share a single vision.
As I've mentioned before, the characteristics of creative organizations are:
• Open channels of communication.
• Not run as a tight ship.
• Wide-ranging perspectives.
• Idea-generating units freed from other responsibilities.
• Investment in basic research.
• Risk-taking philosophy.
• Stable, secure internal environment.
Richard Cantillon, a French economist, originally defined entrepreneurship in 1755 as “self employment with an uncertain return.” Entrepreneurs work independently or as part of a corporation, to develop a product, process, market, or technology into a usable form that’s commercially viable in the marketplace. Entrepreneurs, by definition, chafe at confinement and regimentation.
What is intrapreneurship?
This refers to entrepreneurial efforts inside existing companies ("intrepreneurship") aimed at exploiting new markets or new products, or both, that are eventually treated as new businesses by existing organizations. These venturing efforts may or may not lead to the formation of new units that are distinct from the existing business (e.g., a new company or a new division).
What happens to defeat entrepreneurship in larger companies?
- Success leads to stagnation.
Of the ten leaders in vacuum tubes in 1955, only two were left in 1975. Some failed because of a decision not to invest in the new technology. Others invested, but picked the wrong technology. Still other companies failed because of their inability to play two games at once: to be both effective defenders of what quickly became old technologies and effective attackers with new technologies. Firms like Intel and Motorola were not saddled with internal conflict and inertia, and as they grew, they were able to re-create themselves. Firms like RCA were unable to manage these multiple technological approaches; they were trapped by their successful pasts.
- Large organizations find it difficult to successfully make small investments.
At one firm, it was impossible to invest $20K to automate a simple routine process although the manager could sign off on $20K in overtime for a single weekend. Investments had to be of the order of a million dollars or more just to be considered.
- The company’s culture has a predominantly inward focus.
There are extensive procedures for resolving issues through consensus. There’s an arrogance bred by previous success. There’s a sense of entitlement on the part of some employees to guaranteed jobs without a quid pro quo. There’s a preoccupation with internal procedures rather than an understanding of the changing external marketplace.
The typical intrepreneurial process has four phases:
The Solo Phase, where the intrepreneur works alone to develop an entrepreneurial idea.
The Network Phase, where the intrepreneur shares the idea with close friends and trusted customers.
The Bootleg Phase, where an informal team develops and provides support to the new venture while the intrepreneur takes on the responsibilities of leadership.
The Formal Product Phase, where the new venture becomes a formal, official organizational entity and must deal with the parent organization’s regular policies and practices.
You design organizations that encourage this kind of innovation by creating a culture where employees have a sense of security and a sense of possibility. To get innovation, you must allow freedom to experiment. However, to get good financial results, you must have a high degree of control. This culture is fostered by having internally inconsistent competencies, structures and cultures that can coexist, yet share a single vision.
As I've mentioned before, the characteristics of creative organizations are:
• Open channels of communication.
• Not run as a tight ship.
• Wide-ranging perspectives.
• Idea-generating units freed from other responsibilities.
• Investment in basic research.
• Risk-taking philosophy.
• Stable, secure internal environment.
Tuesday, February 3, 2009
Causes of problems in product development.
Problems in the product development process are often related to:
- Bad linkages across functional structures.
- Unclear business strategy.
- Inadequate marketing information.
- Unclear responsibility for decision making.
- Incomplete membership in the product development team.
- Inability to achieve cross-functional convergence.
- Consideration of divergent viewpoints is cut short too soon.
- Inadequate product ownership.
- Structures and systems are unclear between divisions.
- Data isn’t used or integrated into decision making.
- Culture is conflict adverse.
- An R & D perspective predominates.
- Third party relationships are poorly managed.
- Culture has a “home run” mentality.
- Poor management of evolving expectations.
- Costs of entering a new business are miscalculated.
- Poor boundary management.
- People lack a sense of reward for meeting the overall objective.
- Prevailing concern is only with time to market.
- Convergence is forced.
- The role of “product champion” precludes objectivity.
- Constraints on promoting new market products.
- There’s a lack of cross-functional trust and respect.
- The functional areas own the objectives.
- Knee-jerk problem solving.
- Problem-centric culture is highly rewarded.
- Assumptions on market readiness are incorrect.
Typical dilemmas in high-tech companies include:
“I don’t really know how / when a product development project gets officially sanctioned .”
“We got a request for an additional feature on a project at pre-pilot” (usually because engineering wanted to introduce a new feature they felt could easily be incorporated into the current design).
“I don’t know how long it takes us to develop products - we never measure it.”
“Marketing won’t define the product.” - Technology departments.
“Engineering want us to design the product for them.” – Marketing department.
- Bad linkages across functional structures.
- Unclear business strategy.
- Inadequate marketing information.
- Unclear responsibility for decision making.
- Incomplete membership in the product development team.
- Inability to achieve cross-functional convergence.
- Consideration of divergent viewpoints is cut short too soon.
- Inadequate product ownership.
- Structures and systems are unclear between divisions.
- Data isn’t used or integrated into decision making.
- Culture is conflict adverse.
- An R & D perspective predominates.
- Third party relationships are poorly managed.
- Culture has a “home run” mentality.
- Poor management of evolving expectations.
- Costs of entering a new business are miscalculated.
- Poor boundary management.
- People lack a sense of reward for meeting the overall objective.
- Prevailing concern is only with time to market.
- Convergence is forced.
- The role of “product champion” precludes objectivity.
- Constraints on promoting new market products.
- There’s a lack of cross-functional trust and respect.
- The functional areas own the objectives.
- Knee-jerk problem solving.
- Problem-centric culture is highly rewarded.
- Assumptions on market readiness are incorrect.
Typical dilemmas in high-tech companies include:
“I don’t really know how / when a product development project gets officially sanctioned .”
“We got a request for an additional feature on a project at pre-pilot” (usually because engineering wanted to introduce a new feature they felt could easily be incorporated into the current design).
“I don’t know how long it takes us to develop products - we never measure it.”
“Marketing won’t define the product.” - Technology departments.
“Engineering want us to design the product for them.” – Marketing department.
Monday, February 2, 2009
Organizing the product development process.
High-performing processes today are low-cost, flexible, accurate and fast. They must also be simple because complexity is a breeding ground for errors, delays, high costs and inflexibility. Simple processes must be organized around big work assignments since piecing many little jobs together creates non-value-adding overhead. These big jobs must be assigned to professionals who know how the process works, who understand the business as a whole, who are free to make decisions, and who can work without traditional supervision. As a result, favorite themes in successful new technology companies are connectivity, mobility and interactivity. World-class companies excel in managing concepts, competence, connections and human capabilities.
An effective product development process has:
- divergent phases when different perspectives and opinions are surfaced and explored, and
- convergent phases that involve understanding and agreeing on shared frameworks.
If there isn’t enough convergence and divergence on the front end, then the process takes longer and problems and variations are generated at the back end. To properly control this, project managers need to be skilled in dealing with conflict and able to manage disagreement in a positive way. In addition, key players need to have strong agreement about operating norms and practices from the very beginning of their involvement. Problems and variation are also caused by the organizational context of the product development team - for example when managers are constantly pulling people in and out of projects, or changing the direction and priority of the development effort.
It’s important to put a clearly defined boundary around the product development process. If product development is a project management exercise with overlays from the functional organizations, then it’s essentially a vertical system trying to do horizontal coordinating work.
An increasing number of successful companies are organized around functionality and customer needs instead of around products and functions. They’ve created a horizontal or lateral cross-functional organization for maximum product effectiveness. Wherever people are located in the value chain, they know who they’re linked to and have cooperative agreements with them. Companies invariably end up with strategic alignment problems when there’s not enough lateral teaming up through the hierarchy. The challenge is to develop a process that puts senior managers, who hold the resources, in touch with employees lower down in the organization, who although they know the technology and the customers best, are typically disenfranchised from the strategy process. These parties need to have deep discussions together about opportunity and destiny, unencumbered by the conservatism and lack of expertise of those in between.
Sprinting to market with a next-generation product is more like a rugby match than a relay race. Start with a one-page product description. As soon as top management approves it, set up teams in engineering, marketing and manufacturing, no more than ten people in all. Think of a multidisciplinary team that stays on the project from start to finish, passing the ball back and forth as they move down the field together toward product launch. Designers start work before feasibility testing is finished. Manufacturing and marketing begin gearing up well before the design is completed. These different contributors work together under a program manager. Team members need to be technically excellent, have good interpersonal skills and have a broad enough perspective to be able to understand what others have to say. Reviewing the evolving design regularly saves expensive changes late in the game. However, too many reviews waste time, so the team needs to operate with autonomy. As long as they’re within a pre-agreed range of costs, time and performance characteristics, they should be free to make their own trade-offs without checking in with senior management.
Business units are then organized around the following learning cycle:
• Business portfolio planning - “Do we invest resources to proceed further?”
• Product generation and definition - “Do we invest resources to develop it?”
• Order fulfillment - “Can we make it?”
• Product support process - “Is it a go - or a no-go?”
• Customer experiences the product and comments favorably
• Mature production - “Does it consistently meet specs?”
An effective product development process has:
- divergent phases when different perspectives and opinions are surfaced and explored, and
- convergent phases that involve understanding and agreeing on shared frameworks.
If there isn’t enough convergence and divergence on the front end, then the process takes longer and problems and variations are generated at the back end. To properly control this, project managers need to be skilled in dealing with conflict and able to manage disagreement in a positive way. In addition, key players need to have strong agreement about operating norms and practices from the very beginning of their involvement. Problems and variation are also caused by the organizational context of the product development team - for example when managers are constantly pulling people in and out of projects, or changing the direction and priority of the development effort.
It’s important to put a clearly defined boundary around the product development process. If product development is a project management exercise with overlays from the functional organizations, then it’s essentially a vertical system trying to do horizontal coordinating work.
An increasing number of successful companies are organized around functionality and customer needs instead of around products and functions. They’ve created a horizontal or lateral cross-functional organization for maximum product effectiveness. Wherever people are located in the value chain, they know who they’re linked to and have cooperative agreements with them. Companies invariably end up with strategic alignment problems when there’s not enough lateral teaming up through the hierarchy. The challenge is to develop a process that puts senior managers, who hold the resources, in touch with employees lower down in the organization, who although they know the technology and the customers best, are typically disenfranchised from the strategy process. These parties need to have deep discussions together about opportunity and destiny, unencumbered by the conservatism and lack of expertise of those in between.
Sprinting to market with a next-generation product is more like a rugby match than a relay race. Start with a one-page product description. As soon as top management approves it, set up teams in engineering, marketing and manufacturing, no more than ten people in all. Think of a multidisciplinary team that stays on the project from start to finish, passing the ball back and forth as they move down the field together toward product launch. Designers start work before feasibility testing is finished. Manufacturing and marketing begin gearing up well before the design is completed. These different contributors work together under a program manager. Team members need to be technically excellent, have good interpersonal skills and have a broad enough perspective to be able to understand what others have to say. Reviewing the evolving design regularly saves expensive changes late in the game. However, too many reviews waste time, so the team needs to operate with autonomy. As long as they’re within a pre-agreed range of costs, time and performance characteristics, they should be free to make their own trade-offs without checking in with senior management.
Business units are then organized around the following learning cycle:
• Business portfolio planning - “Do we invest resources to proceed further?”
• Product generation and definition - “Do we invest resources to develop it?”
• Order fulfillment - “Can we make it?”
• Product support process - “Is it a go - or a no-go?”
• Customer experiences the product and comments favorably
• Mature production - “Does it consistently meet specs?”
Subscribe to:
Posts (Atom)
